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Business

March 18, 2017

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SECP achieves milestone

SECP achieves milestone

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has achieved another milestone in ease of doing business, as its recommendations to amend the 43-year-old Companies (Appointment of Legal Advisers) Act, 1974, has been approved by the parliament, a statement said on Friday.

The Companies (Appointment of Legal Advisors) Act, 1974, was promulgated in 1974, which earlier required the companies having paid-up capital of Rs0.5 million and above, to appoint a legal adviser to advise such companies in the performance of their functions and the discharge of its duties in accordance with the law, it added.

It was considered that the requirements of the legal adviser for small companies was a major hurdle in their corporatisation, as it increased the cost of doing business due to hiring of legal adviser to fulfill this mandatory requirement.

Now, the Companies (Appointment of Legal Advisers) (Amendment) Act, 2017, has been promulgated and the threshold of the paid-up capital for companies to appoint their legal adviser has been increased to over Rs7.5 million paid-up capital.

Previously, there were almost 40,000 companies, which were required to appoint legal advisers, but now after the amendment, approximately 10,200 companies are required to appoint legal advisers and around 30,000 companies have been relieved from this regulatory burden through this initiative, the statement said.

The amendments to the Companies (Appointment of Legal Advisers) Act, 1974, are aimed at saving the small-sized companies from financial burden of appointing legal advisers.

As part of the facilitation reforms, this is another facilitative step by the SECP to provide simple and encouraging regulatory environment for the companies with small capital base, it added. Previously, the penalty for contravention of the Companies (Appointment of Legal Advisers) Act, 1974, was imprisonment. Now, the SECP has been empowered to impose penalty for contravention of the provisions of the law, instead of the courts, which has reduced the workload of the courts.

 

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